TLDR
- Q4 adjusted earnings reached $1.67 per share, surpassing Wall Street’s $1.57 projection
- Sales declined 1.7% annually to $7.64 billion, exceeding analyst expectations of $7.62 billion
- Comparable sales increased 1.8%, crushing predictions of a 0.9% decrease
- Shares rallied 9% during Wednesday’s premarket session, recovering from a 23% year-to-date decline
- Fiscal 2026 EPS outlook of $1.90–$2.10 disappointed versus the $2.20 Street estimate
Macy’s (M) delivered better-than-anticipated fourth-quarter results Wednesday morning, propelling shares 9% higher in premarket action following months of market struggles.
The iconic retailer revealed adjusted earnings of $1.67 per share for Q4, exceeding the Street’s $1.57 projection. Total revenue registered $7.64 billion, representing a 1.7% year-over-year decline yet still outperforming the $7.62 billion analyst consensus.
The top-line contraction stemmed primarily from strategic store closures executed during the previous fiscal period. Adjusting for these planned shutdowns reveals healthier underlying performance.
Comparable-store sales — a critical retail benchmark measuring locations operational for at least 12 months — climbed 1.8%. This soundly beat analyst projections calling for a 0.9% drop and represented one of the report’s standout metrics.
CEO Tony Spring’s “Bold New Chapter” initiative advanced into its sophomore year, with continued emphasis on attracting affluent consumers. This strategic pivot manifested across brand performance: the flagship Macy’s banner posted modest comparable growth of 0.4%, while Bloomingdale’s surged 8.5% and Bluemercury expanded 2.5%.
With shares down 23% entering the earnings release, even marginal outperformance carried significant momentum.
Guidance Falls Short
For fiscal 2026, management projected net sales between $21.4 billion and $21.7 billion, with adjusted earnings per share ranging from $1.90 to $2.10. Wall Street had anticipated $21.42 billion in revenue and $2.20 in earnings per share.
While the sales guidance brackets consensus, the earnings forecast disappoints — both at the midpoint and upper bound.
Executives emphasized taking a “prudent approach” to forward estimates, highlighting macroeconomic uncertainty and geopolitical turbulence. Consumer spending pressure persists, especially among budget-conscious shoppers navigating persistent inflation.
Planned store shutdowns are projected to reduce sales by approximately $145 million this fiscal year. Though anticipated, this remains a meaningful obstacle.
Tariff Impact Flagged for Q1
Import duties represent another critical variable in Macy’s outlook. With substantial sourcing from China, the company warned that tariffs will exert maximum margin pressure during the first quarter of 2026 — expecting peak impact within that timeframe.
Management expressed confidence that tariff headwinds will moderate during the year’s second half. This perspective aligns with several retail peers, including Walmart and Kohl’s, which have similarly issued conservative annual projections.
A Supreme Court decision established a standardized 10% tariff rate, though retailers carrying inventory acquired under higher duty structures continue facing near-term cost burdens as existing stock flows through channels.
Retailers with Chinese supply chain exposure are monitoring Q1 developments intently. For Macy’s, this translates to anticipated first-half challenges before — assuming projections hold — conditions improve later in the fiscal year.
The fourth-quarter performance provided investors tangible positives. Comparable sales advanced 0.4% for the core Macy’s brand, jumped 8.5% at Bloomingdale’s, and gained 2.5% at Bluemercury.
